CM 


SB252 


Cibrarg 


SB252 
kT87 


?fnrtlj  (Carnltna  g-talp 
®°ll'*9'rEX.  LIB. 


This  book  IS  due  on  the  date  indicated  below 
and  IS  subject  to  a  fine  of  FIVE  CENTS  a 
day  thereafter. 


T.,<.^   w  au^^ 


Ginning 


n  in 


ortii 
Carolina 


Published  By 
THE   NORTH  CAROLINA  AGRICULTURAL   EXTENSION  SERVICE 


North  Carolina  State  College  of  Agriculture  and  Engineering  of  the  University  of  North  Carolina  and 
the  U.  S.  Department  of  Agriculture,  Cooperating.  State  College  Station,  Raleigh,  N  C,  D  S.  Weaver, 
Director.  Distributed  in  furtherance  of  the  Acts  of  Congress  of  May  8  and  June  30,  1914. 


COST  OF  GINNING  COTTON  IN  NORTH  CAROLINA 

Prepared  by 

W.  Glenn  Tussey,  Formerly  Extension  Cotton  Marketing  Specialist 

and  M.  Elton  Thigpen,  Extension  Cotton  Marketing  Specialist 


Volume  Declining  and  Gins  Decreasing 


Ginning  volume  in  1957  continued  its  long-run  decline.  Soil  Bank  partici- 
pation (24^  of  alloted  acreage)  and  unfavorable  weather  caused  volume  to 
decrease  to  236,000  bales  in  1957  from  351,000  bales  in  1956.  Favorable 
weather  in  1958  contributed  to  a  small  increase  in  total  production  even 
though  Soil  Bank  participation  exceeded  the  1957  level  (39.5^  of  the  alloted 
acreage).  Lack  of  volume  leaves  small  hope  for  North  Carolina  ginners  to 
recover  more  than  their  direct  cash  costs. 

The  number  of  active  gins  in  North  Carolina  decreased  from  373  in  1956 
to  312  in  1958. 


Volume  of 

Cotton  Handled  by  North 
1956,  1957,  and  1958  Sea 

Carolina 
sons 

Gins 

Bales  ginned 

r*jmber  of  Gins 

1956 

1957 

1958 

500  or  less 

123 

158 

133 

501  -  1,000 

110 

98 

82 

1,001  -  1,500 

60 

52 

43 

1,501  -  2,000 

40 

25 

29 

2,001  -  3,000 

32 

8 

20 

3,001  and  over 

__8_ 

1 

—  5. 

TOTAL 

373 

342 

312 

-2- 


Excess  Capacity  Exists 

Excess  capacity  exists  in  the  ^)o^th  Carolina  cotton  ginning  industry. 
The  industry  has  handled  only  a  fraction  of  its  ginning  potential  in  recent 
years,   ^forth  Carolina  ginners  are  not  only  faced  with  the  problem  of  excess 
capacity  but  are  also  faced  with  increased  costs  of  doing  business. 

A  study  of  25  randomly  selected  cotton  gins  showed  that  cash  expenses 
in  1957  were  approximately  equal  to  ginning  revenue,  leaving  very  small  re- 
turns to  management  and  durable  inputs.  The  ginners  interviewed  have  very 
little  incentive  to  replace  their  establishments  as  they  wear  out,  inasmuch 
as  only  a  fraction  of  each  dollar  invested  can  be  recovered  at  present  volumes. 
Many  ginners  will  make  minor  repairs  sufficient  only  to  keep  the  gin  in  operat- 
ing condition  until  uneconomic  repair  bills  force  them  to  cease  operations. 

Out-of-Pocket  Cash  Expenses 

Total  out-of-pocket  cash  expenses  per  bale  were  found  to  be  $9.36  at 
2-stand  gins,  $10.35  at  3-stand  gins,  and  $9.62  at  4-stand  sample  North  Carolina 
gins  during  the  1957  season.  For  all  gins  studied,  cash  expenses  averaged 
$9.94  per  bale. 

Ginning  labor  expenses  were  found  to  be  the  largest  single  expense  item 
during  the  1957  season.  Adverse  weather  which  lengthened  the  ginning  season 
increased  the  cost  of  ginning  labor  which  averaged  $2.89  per  bale  for  the 
sample  gins. 


Cash  Expenses  of  Ginning  Cotton  in  North  Carolina 
At  Sample  Gins,  by  Size  of  Gin,  1957  Season 


Item 

Size  of  Gin 

Sample 

2  Stands 

3  Stands 

4  Stands 

Gins  in  sample 

3 

13 

9 

25 

Average  bales  ginned 

233 

599 

1,035 

711 

Average  capacity  of  gins* 

1,602 

2,310 

3,114 

2,342 

(Dollars  per 

Bale) 

Direct  expenses 

2.91 

2.65 

3.11 

2.89 

Ginning  labor 

Bagging  and  ties 

2.08 

2.22 

2.18 

2.19 

Operating  expenses 

1.66 

3.36 

2.62 

2.93 

Total  direct  expenses 

6.65 

8.23 

7.91 

8.01 

Overhead  cash  expenses 

.78 

.79 

.91 

.86 

Office  expenses 

Insurance 

1.43 

.88 

.42 

.66 

Taxes  and  licenses 

.50 

.45 

.38 

.41 

Total  overhead  expenses 

2.71 

2.12 

1.71 

1.93 

Total  cash  expenses 

9.36 

10.35 

9.62 

9.94 

*  Average  gin  capacity  is  based  on  a  forty-hour  per  week  for  a  season  of 

15  weeks. 
Average  per  bale  labor  expenses  at  sample  gins  fluctuated  from  a  lov/  of  $1.68  per 
bale  during  the  busiest  week  of  the  season  to  as  high  as  $17.65  per  bale  during 
early  season  weeks  when  ginning  was  just  getting  underway  and  $10.22  per  bale  late 
in  the  season  when  ginning  was  almost  complete. 


Ginning  Revenue 

Custom  ginning  receipts  averaged  $11.33  per  bale  at  the  sample  hJorth 
Carolina  gins  for  the  1957  season.   In  addition  to  the  receipts  from  custom 
ginning,  there  are  other  ginnery  receipts.  Other  revenue  sources,  closely 
related  to  ginning  include  receipts  from  seed  cotton,  lint  cotton,  cottonseed, 
and  meal  and  hulls.  Custom  ginning  receipts  were  supplemented  by  $3.31  per 
bale  from  sales  of  cotton,  cottonseed  and  cottonseed  products  handled  by  the 
ginneries. 


Cash  Receipts  of 

Ginning  Establishments  in 

North  Carolina 

At  Sample 

Gins, 

by  Size 

of  Gin,    1957 

Season 

Item 

Size  of  Gi 

n 

Sample 
Total 

2  Stand 

s         3  Stands 

4  Stands 

[Dollars  per 

Bale) 

Ginning  charges 

10.82 

11.00 

11.65 

11.33 

Gross  profit  on  purchases 

Seed  cotton 

.25 

.12 

.15 

.15 

Lint  cotton 

.19 

.47 

-.10 

.16 

Cottonseed 

5.21 

2.36 

2.96 

2.78 

Meal  and  hulls 

.22 

.15 

.28 

.22 

Total 

5.87 

3.10 

3.29 

3.31 

Total  cash  receipts 

16.69 

14.10 

14.94 

14.64 

Returns  to  Durable  Equipment 

North  Carolina  gins  have  very  little  incentive  to  replace  their  establish- 
ments as  they  wear  out  inasmuch  as  only  a  fraction  of  each  dollar  invested  in 
durable  goods  could  expect  to  be  recovered.  This  is  illustrated  for  4-stand 
gins  in  Figure  1. 

Current  volume  levels  and  prices  received  for  ginning  are  resulting  in 

ginning  services  being  sold  below  long-run  cost.   In  view  of  this  it  appears 
certain  that  the  number  of  cotton  gins  in  the  state  will  continue  the  decline 
which  has  been  in  evidence  over  the  last  thirty  years.  Although  over  1,200 
gins  were  in  operation  in  1930  only  312  were  active  in  1958.   Increased  volume 
per  gin  is  necessary  if  the  North  Carolina  ginning  industry  is  to  be  economically 
healthy. 

Diversification  and  Integration  of  Ginners 

North  Carolina  ginners  have  a  variety  of  business  interests.  Ginners 
have  found  the  secret  of  business  survival  through  business  diversification 
and  integration.  During  1957,  only  5.3%  of  North  Carolina  ginners  had  no 
other  non-ginning  activity.   Sixteen  per  cent  had  gins  and  farms  only.  Fifty- 
two  per  cent  operated  farms  and  other  businesses  in  addition  to  their  ginning 
operations  and  27/o  operated  gins  and  other  businesses  without  farming  operations. 

"Gin  Days"  Helps 

The  designation  of  "gin  days"  or  certain  days  during  the  slack  weeks 
when  the  gin  was  operated  helped  to  reduce  labor  costs.  A  few  North  Carolina 


-6- 


gins  were  on  "gin  days"  all  season  because  of  the  low  volume  of  cotton  to  be 
ginned.  By  operating  on  "gin  days"  for  greater  portions  of  the  season,  ginners 
could  materially  reduce  labor  costs.  Cooperation  of  all  ginners  in  the  area 
could  be  obtained  through  their  associations.   In  the  areas  of  the  state  where 
seed  cotton  storage  is  available,  cotton  could  be  stored  for  several  days 
until  enough  is  accumulated  for  a  day  of  continuous  ginning.   Not  only  labor 
costs  but  other  costs  such  as  power  costs  would  be  less  because  of  less  frequent 
stopping  and  starting  of  the  machinery. 


36 


32 


28 


16 


Figure  J, 


(8  Total  receipts 
X  Ginning  receipts 


$1.00  per  dollar  invested 


400   800 


1200   1600  2000  2it00 
Season  volume  (bales) 


2800  3200  3600 


Present  Value  of  Durable  Inputs  per  Dollar  Invested, 
Replacement  Cost  Basis  and  Ginning  Receipts  at 
'+-Stand  Sample  Gins,  1957  Season 


